The Dangers Of Being Too Lean

The headhunters are whooping it up. Not since the glory days of the late Seventies and early Eighties has business been so good. After years of downsizing and reengineering, corporations are scrambling to replenish their managerial ranks. Managers are getting hired again.

That's the good news. The bad news is that the rush to headhunters for help is symptomatic of a deeper hollowing out. Many companies not only lack management depth they have also gutted their human resources, information management, and design capacities as well.

As companies strive to cut costs and be more globally competitive, they are increasingly outsourcing key functions. Take product development. Dozens of companies, from medical electronics to consumer products, are turning to one-stop shops that invent the concept, design the item, tool it, arrange manufacturing overseas, and line up distribution. Sounds great, except that all the knowledge remains outside the parent. Companies can get divorced from key markets and trends.

It can get worse with data. A growing number of service and high-tech companies are turning over all their data management to outside concerns. Again, the savings they realize can be tremendous, but the loss of control may turn out to be painful. In the Information Age, information is the product. Slicing and dicing and generally rearranging the data flow of a corporation can often lead to new lines of business that meet unexpected consumer demands.

Just-in-time management, just-in-time product development, and just-in-time data management all sound cutting-edge correct. But quick fixes have their price. Now is a good time for corporations to rebuild their muscle. Economic growth is steady, and inflation is under control. Being competitive means more than just being cheaper. It means being smarter and better.